Toyota Moves To Settle 'Sudden Acceleration' Lawsuits For More Than $1 Billion

Toyota has agreed to spend more than $1 billion to resolve lawsuits stemming from "unintended acceleration" cases. In November, the company displayed new cars at the Los Angeles Auto show.

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Originally published on December 27, 2012 7:27 am

Owners of Toyota vehicles that experienced sudden and unintended acceleration have reached a settlement that could require the carmaker to pay as much as $1.4 billion in claims, according to the auto maker and the law firm representing Toyota customers.

U.S. District Court Judge James Selna, at whose direction the many lawsuits over the "runaway car" fears were consolidated in 2010, will review the proposed settlement Friday.

The plaintiffs' law firm, Hagens Berman, says the final settlement has a value of between $1.2 and $1.4 billion, with the money going toward either direct payments to consumers or to pay for work on their vehicles — specifically, the installation of a brake-override system that reduces a car's power output if both the gas and brake are applied at once.

"This was a difficult decision – especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle control systems," said Christopher P. Reynolds, chief legal officer of Toyota Motor North America. "However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers."

The proposal includes $250 million in compensation for the reduced value of vehicles sold by Toyota owners between Sept. 1, 2009 and Dec. 31, 2010. An additional $250 million would compensate owners whose vehicles aren't eligible for a brake-override system.

"The amount consumers receive depends on the model and year of their Toyota, and the state in which the car was purchased," according to the release.

While reports of unintended acceleration in Toyota vehicles made headlines a few years ago, the carmaker wasn't alone in being suspected of building "runaway cars," as they came to be known.

As NPR's investigative unit reported in 2010, "other automakers have had high rates of complaints in some model years, including Volkswagen, Volvo and Honda — in some cases resolving the apparent problems through evolving technology and recalls."

In Toyota's case, the carmaker recalled more than 8 million vehicles to deal with the claims; its executives also testified on Capitol Hill, as the reported cases spread.

And in 2011, a Transportation Department investigation concluded that the dangerous incidents did not stem from faulty electronics. NPR's Tracy Samilton reported that the carmaker admitted that "in some cases loose floor mats could get trapped on gas pedals, and that some gas pedals had become sticky, and wouldn't always fully release.

But Tracy also said that NASA engineers who had looked at the problem found an additional possible cause: pedal misapplication, or what one dealer termed "driver error."

On the business side of things, Toyota says that it will record "a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the economic loss settlement and possible resolution costs of civil litigation brought in California by the District Attorney of Orange County and an investigation by a multi-state group of Attorneys General stemming from previous recalls."